ORIGINAL: moses
Ignoring all the emotional considerations I think the unconditional surrender demand was more a result of the momentum of raising such large military forces.
By the time the war was viewed as clearly lost by the axis powers the allied war machine was just reaching its full potential and could completely dominate the axis. Since these allied forces were created at great expence and could not be maintained in peacetime there was great incentive to use them to decisively defeat all opposition prior to demobalization.
So the Japanese had little negotiating leverage in 1944/45.
The only hope would seem to be for Japan to win a decisive victory early. Say they win Midway big and then realize that they are going to lose the war!!! So they offer peace on very reasonable terms giving back most conquered territory. Of course not much chance of that as imagine the "victory disaese" after them wining a Midway.
My scenario assumes that Japan opens with a declaration of war and runs through the SRA, but doesn't give America as big a reason to come back fast. Germany declares like it actually did. The WPD then decides to go after Germany, but King doesn't have the 'revenge' motivation on his side to keep the Navy strong in the Pacific. Then instead of 70% of war production going to the ETO, it's 90%, and the Pacific is like Burma.
BTW, the Navy war planning was a bit unrealistic, and the engineers running the surface through train was planning to take the eastern mandates whether or not we had the resources to take Truk and Mindanao. So the US Battle Fleet meets the KB off Kwajalein. Care to make any bets on the outcome? And since our hotheads walked into it, rather than the IJN sneak attacking us at Pearl, it's both more final and more embarrassing.









